NASDAQ Books Gains in Quiet Session

The dog days of summer hit the market with volume dropping to the lowest levels since early July. Early morning lows were met with buyers, but for the S&P 500 and the Dow couldn’t muster gains. Over at the NASDAQ and Russell 2000 were able to grab gains. Not much in the way of economic data to get the market to dive one way or another. Our uptrend remains despite the number of distribution on the NASDAQ and the S&P 500. While it is easy to make excuses and say we should be cautious, but there isn’t a way to know whether or not we have topped. We will continue to push forward and use price as our guide. Market leaders continue to act well in this market environment. It is nice to see market leaders continue to hold up well despite the number of distribution days we see. Sure, next month we’ll see a confluence of events that may or may not trip up this market. However, we aren’t there yet and guessing how the market will react to any kind of event is a fools’ game. We have price and what we know at this point in time is this market does not want to go down. If we do see major cracks in market leaders and further major distribution we’ll change our tune. Until then we’ll continue to push forward. There are plenty of people writing and bloviating about what will happen with the Fed through the end of this year. Will Big Ben taper or not? Is the next Fed chairman Yellen or Summers? We can debate how Fed policy has completely destroyed the cost of savings devastating those living off interest including pension funds. However, this is simply policy debate and should not be mixed with trading the markets. It doesn’t matter to use if the Fed will taper or if the next Fed chairman is Yellen or Summers. We’ll stick with price and leave the rest of the nonsense to others. Cut those losses short and ride your winners!

Stocks Find Strength at the Morning Lows Closed just off the Highs of the Session

After the recent bout with selling the market was able to find buyers pushing the market higher as volume swelled. Whether or not it was managers trying to get in their trades prior to leaving the Hamptons or Shore doesn’t really matter. Expanding volume as price moves higher is generally a good thing. Just after 10:30 AM EDT it appeared as if sellers were winning the day and would extend the trading losses. However, the market was able to find buyers willing to step up and scoop up shares. We did not hit new highs today, but the action was certainly bullish enough to suggest we may have another new high. Stick with the trend. Sentiment indicators crept towards the bullish tint, but not in huge waves. AAII Bull increased to 39.5% from 34.62% last week. Bears jumped too from 25% to 26.65%. Clearly more of the crowd edged towards a bullish stance week over week. However, we aren’t seeing extremes where Bulls exceed 50% and bears are well under 20%. NAAIM sentiment survey showed rose slightly from 74% to 75% invested. This move doesn’t exactly scream over exuberance from money managers putting money to work. Again, price action certainly hasn’t suggested we are at a top and even sentiment hasn’t suggested we’ve hit one either. Market leaders continue to act well in this environment despite a few mishaps with earnings: GMCR and SCTY. Even GMCR which reacted poorly to stop didn’t end the session in terrible fashion. TSLA performed well after earnings and continues to be a leader. PCLN reported today and is jumping nicely in after-hours trading at the moment. If you stick with market leaders and stay disciplined you can reach outsized gains. It takes following the methodology and not making reckless decisions. Many will still try and call a market top here. They may be right about this market and we’ll go lower. However, what we know right now is we remain in an uptrend and we are going to stick by our process. There is no need to be a hero and turn into a zero. Longevity is the name of the game and we are here to build long-term success. Have a great weekend.

Technology led by FB fuel the NASDAQ Higher

The NASDAQ hit a new multi-year high prior to noon time only to see sellers rush in and quickly move the index to its lows of the session. The S&P 500 was unable to sustain its morning gains too despite the efforts by technology names. Industrials and utilities helped push the SPX into positive territory. Consumer Services was the largest drag. Volume was up on the session across the board, but like most summer trading sessions volume ran below average. It is not big surprise volume is below average with the Fed on tap to deliver its policy statement tomorrow at 2pm. This uptrend remains intact given the price action we have in front of us. So many are concerned over the actions of the Fed tomorrow and are trying to gamble with how the market may or may not react. You cannot be 100% sure how the market will or won’t react to whether or not the Fed talks taper or not. It is pretty clear at some point they will taper and finally end the QE program. When is another question to be answered only by the Fed. Many do believe it will start sometime this year and with the falling budget deficit it will be interesting to see if the Fed will become the soul purchaser (monetizer) of US Treasury debt. Or will they simply taper their purchases. All fun questions to ask, but it is no way to position yourself to make gains in the market. FB gave a classic entry after posting earnings last week. The stock hasn’t looked back since it took a breather on Friday. There have been plenty of naysayers, but price action clearly shows there is a bias to the upside. AAPL was leading the charge along with FB, but pulled back from its high of the session. There is clear resistance at the February, March, and May highs. It will be interesting to see how the stock reacts at these points. A rising AAPL price is certainly a gigantic positive for the NASDAQ. Aside from the Federal Open Market Committee policy statement release second quarter GDP is set to be released. According to Bloomberg the consensus figure is for 1% annualized growth in the second quarter. Quite pathetic as the Fed has been pumping $85 billion a month since December and one percent growth seems quite pathetic. Common consensus says a higher than expected GDP figure would push the Fed to taper sooner rather than later. How the market reacts will be how we react. We will not try to game the direction of the market. Stay with the trend.

In a rare move Stocks end lower; Gold and Silver find their Footing

Heading into the week the US market once again watched the Nikkei continue to move further into the stratosphere. Futures were pretty anemic heading into the trading session today. Overnight news focused on the plunge in precious metals as Silver and Gold were hit hard. Despite the negative open and sentiment both precious metals were able to find their footing and reverse to close positive. Each metal tested key points and perhaps have put in a short-term bottom. SPX briefly hit all time highs, but then were knocked off their highs of the session. Support did filter into the market helping the market to close off the lows of the session. All signs point for this market to continue higher and with Turnaround Tuesday tomorrow gains should resume. The interesting action today centered around the precious metals and one that could turn out to be a significant turning point in the struggling precious metals. GLD tested April lows today and with a bunch of volume showed tremendous amount of support. On the other hand SLV had dropped below its pivotal point only to plow through it today. Volume certainly is saying something for both precious metals. Was today a bottom for GLD and SLV? Is anyone’s guess, but we do have a clear exit in case this falls apart on us. Wednesday we’ll get a read on Existing Home Sales and the Federal Reserve meeting minutes. The focus on the language in these minutes over the “taper” of “halting” of the current money printing scheme will be nauseating. CNBC et al will have a field day with LIESman leading the charge. Price will lead the way for us. Focusing on our stocks and how they act is much more important than anything anyone can “guess” about the Federal Reserve meeting minutes. Stick with Big Wave Trading. Enjoy this week!